Spending For These Conditions Is Expected To Double During That Period

Bethesda, MD -- Spending on mental health and substance abuse (MHSA) treatment is projected to double between 2003 and 2014, according to new forecasts by the federal government’s Substance Abuse and Mental Health Services Administration (SAMHSA), reported in an article published today on the Health Affairs Web site. Nevertheless, growth in spending for MHSA treatment during this period is expected to lag behind growth in overall health spending, although by a smaller margin than in the 1986-2003 period.

Spending on MHSA treatment is expected to increase from $121 billion in 2003 to $239 billion in 2014, essentially duplicating the 6.4 percent growth rate in behavioral health spending that prevailed between 1986 and 2003. From 2003 to 2014, overall health spending is expected to grow 0.8 percentage points faster than the rate of growth in spending for MHSA treatment. As a result, behavioral health spending is predicted to decline as a share of total health spending, from 7.5 percent in 2003 to 6.9 percent in 2014. By comparison, from 1986 to 2003, behavioral health spending growth lagged behind overall health spending growth by twice as much, 1.6 percentage points.

"Growth in spending for behavioral health has lagged behind overall health spending growth largely because behavioral health spending is not driven by expensive new technologies to nearly the same extent as other health spending. However, the one exception to this statement is prescription drugs, which account for a proportion of mental health spending that is already high and likely to increase still further. We project that the growth in spending on prescription drugs for mental health treatment will outpace overall health spending growth, and as a consequence we expect the growth in behavioral health spending to maintain its historical growth rate while overall health spending growth slows over the next decade," explained Katie Levit, a senior researcher at Thomson Reuters in Washington, D.C., the lead author of the Health Affairs article and leader of the team that produced the new spending projections for SAMHSA

Mental Health Spending

The bulk of MSHA spending goes toward the treatment of those with mental illnesses. In 2014, spending on mental health (MH) treatment is expected to be $203 billion -- 85 percent of all behavioral health spending. Growth in spending for MH treatment is projected to be 6.6 percent from 2003 to 2014, about the same as the average rate of growth from 1986 to 2003.

In 2014, 58 percent of MH spending is expected to come from public sources, the same as in 2003. Public and private MH spending are both expected to grow 6.6 percent between 2003 and 2014. This represents an increase in the growth rate for private MH spending and a decrease in the growth rate for public MH spending, as compared to the 1986-2003 period. This reflects relatively fast expected growth in spending for prescription drugs and physician services, which are predominantly funded by private insurance, and relatively slower growth in spending for multiservice MH organizations, which are almost entirely funded by public sources.

Medicaid is expected to remain the single largest payer for MH treatment, accounting for 27 percent of MH spending in 2014. Medicare’s share of MH spending is expected to rise to 12 percent in 2014, reflecting the program’s prescription drug benefit. Medicare and Medicaid are expected to increase faster than other sources of state and local funding for MH treatment, allowing states to leverage their state funds with federal Medicaid dollars, but also potentially complicating MH treatment by removing control of MH spending from specialized MH agencies in some states.

Substance Abuse Spending

Spending on SA treatment is expected to total $35 billion in 2014, 15 percent of MHSA spending. However, this may underestimate actual SA spending. Spending in the SAMHSA forecasts is classified only by principal diagnosis, and because patients frequently present with both MH and SA conditions, providers usually list the MH condition as principal because MH insurance benefits are typically more generous than SA benefits.

Growth in SA spending is projected at 5.0 percent between 2003 and 2004, slightly faster than the 4.8 percent rate at which SA spending grew between 1986 and 2003, but markedly slower than the expected 2003-2014 growth rate in MH spending. SA spending growth is expected to increase at slower rates than MH spending mainly because pharmacotherapy, which has driven increases in MH spending, plays only a small role in SA treatment.

Public spending, which accounted for three-quarters of all SA spending in 2003, is expected to swell to 83 percent of SA spending by 2014. SA spending by private insurers in 2014 is expected to be below the amount insurers spent in 1986.

Health Affairs, published by Project HOPE, is the leading journal of health policy. The peer-reviewed journal appears bimonthly in print with additional online-only papers published weekly as Health Affairs Web Exclusives at www.healthaffairs.org. The full text of each Health Affairs Web Exclusive is available free of charge to all Web site visitors for a two-week period following posting, after which it will switch to pay-per-view for nonsubscribers. Web Exclusives are supported in part by a grant from the Commonwealth Fund.